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Optimal online channel configuration for a Manufacturer under price and lead time-sensitive demand

Author

Listed:
  • T. M. Rofin

    (National Institute of Industrial Engineering (NITIE))

  • Sreejith Alathur

    (Indian Institute of Management Kozhikode)

Abstract

The purpose of this paper is to model and compare the performance of online dual-channel supply chain configurations comprising of a Manufacturer and an E-tailer and to identify the optimal configuration under the assumption that demand is both price and lead time sensitive. The study considers two distinct online dual-channel formats, viz. (i) E-tailer–direct online channel (DOC) of the Manufacturer and (ii) E-tailer and an Agency Channel (e-marketplace) of the Manufacturer. The competition between the channels has been modelled with the help of game theory and optimal decisions of the channel members were derived from equilibrium analysis. Further, a numerical analysis was carried out to quantify the optimal decisions and to derive the managerial insights. The study finds that E-tailer–DOC configuration is beneficial for the Manufacturers compared to E-tailer–Agency Channel configuration in the case of products for which customers’ price sensitivity is higher than the lead time sensitivity. However, the Manufacturer is gainful by choosing E-tailer–Agency Channel configuration over E-tailer–DOC configuration in the case of products having higher lead time sensitivity.

Suggested Citation

  • T. M. Rofin & Sreejith Alathur, 2024. "Optimal online channel configuration for a Manufacturer under price and lead time-sensitive demand," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 23(2), pages 121-139, April.
    • Handle: RePEc:pal:jorapm:v:23:y:2024:i:2:d:10.1057_s41272-023-00440-y
    DOI: 10.1057/s41272-023-00440-y
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